José María Beneyto has been a European Union civil servant, Member of the European Parliament, and worked in the European Parliament. In addition, he is a professor of Public International Law and International Relations and has extensive experience as a lawyer specialising in mergers and acquisitions, corporate law, European law and competition and arbitration law. He also serves as a member of advisory boards of various companies and on the board of trustees of several foundations. He is also currently the chairman of the Institute for Governance and Society. PROA Communication has spoken to him about good corporate governance practices and what role strategic communication can play in this.
The purpose of the Governance and Society Institute is to contribute to the improvement of governance practices in companies and organisations so that they achieve a more positive impact for the economy and society. What are the most common governance problems in companies and organisations that the Institute addresses and what are the consequences of not addressing them?
Corporate governance is dynamic and responds to the transformation of business and our own economy. Initially, corporate governance is initiated because it becomes apparent that there may be a clear difference between the interests that executives have and the interests of shareholders. It arises at a time when this becomes evident and attempts to respond to this possible asymmetry, to this possible differentiation of interests. But as in any organisation, we need a balance of powerThe board of directors, where shareholders are represented and which is charged with the responsibility of supervising the work of the executives, is responsible for this. With this, we would already have a first key objective of governance, aligning the interests of the two main pillars of the organisation: investors and executives.
However, over the last ten years, this conception of corporate governance has evolved to incorporate broader interests encompassing all stakeholders (stakeholders). For a long time it was said that the main and almost the only objective of the company was to make profits for the shareholders, but today we are aware that the company's objectives are much broader and that there is a corporate responsibility that affects a multitude of groupsThis includes not only investors, but also employees, suppliers and even the communities in which the company operates. In other words, organisations are now absolutely connected to all the actors in their ecosystem and the values of the organisation itself will be fundamental in the alignment of all these interests.
That is why we address and work at the Institute, as the name suggests, with governance and society. In this area, the most common problems we often encounter are the misalignment of these interestsSome organisations are not aware of them in some cases or do not have mechanisms in place to readjust them. In this way, conflicts arise between the management committee and the board of directors, within the board itself, between several shareholders or with one or more stakeholders, which can lead to significant crises. We have seen this in some companies where the board of directors has failed to perform its control function over executives, or in others where there has been interventionism by state shareholders or in cases where activist funds have entered the company.
What activities does the institute usually carry out to solve them?
The Institute is a think tank and a centre that is connected to leading academic institutions, with a range of professionals working in the world of corporate governance who pass on best practices. It provides information on new constraints such as geopolitical factors, complianceWe also organise a number of activities with a strong focus on practice, including case studies and crisis situations. We also organise a variety of activities with a strong focus on practice with experiences from case studies and crisis situations. We have monthly meetings with listed companies and family-owned companies.We have been doing this for six years, on a regular basis, every month. We have been doing this for six years, on a regular basis, every month.
In addition, we also have some conferences where we address slightly broader issues: we have recently held one on current challenges in corporate governance and family business and we will now hold another one on corporate governance and family business. compliance. Also another one on how the macroeconomic and financial environment affects, interest rates, propensity to save, investment, inflation, what is going to happen in the coming months. In short, we are continually ensuring that decision-makers, both at executive level and on boards of directors, can have permanent access to the latest information on the macroeconomic and financial environment. an updated reference on the extent to which best practice in corporate governance can help them. We have to permanently review the corporate governance designs in companies, we have to introduce new trends, new regulations, and we transmit all of this through the system's activities.
How can better corporate governance practices influence a company's reputation and how can it be strengthened?
Reputation is increasingly important, but it depends on a growing number of factors. All the interests of the groups mentioned above require attention and the company today is required to represent certain values. For example, a company's reputation would be immediately undermined if it were not sensitive to issues of work-life balance, or to issues of talent and of course respect for the environment. These issues have been greatly strengthened in the aftermath of the pandemic.. We have seen this in the case of financial institutions, in which there have been specific complaints from social groups such as the seniorsThe children's rights were not being respected, and they complained that care was being given with this age group in mind. All this has affected employees and immediately affects the reputation of companies.. With corporate governance, the company has to anticipate, but above all it has to convey this kind of concern for interests and values. It is no longer enough to meet quarterly profits, but must respond to the interests of all.
In this sense, what role do you think good strategic communication would play to complement good governance practices in improving the positioning and strengthening the reputation of the company?
It is very much linked in the sense that communication today is a part of business strategy. Everything that the company is doing in terms of corporate governance, in its concern for the company's objectives, interests, values, needs to be communicated internally and externally. Moreover, if we start from this idea that the company is an organisation that is in an ecosystem, that receives inputs of their different circles, and that, on the other hand, they also continuously transmits to society a series of inputs from within the companypublic opinion is becoming increasingly important. It can therefore also have an impact on a company's short, medium and long-term strategy, not to mention when there is a crisis situation or a moment of reputational damage. Companies also need to improve their reputation by including all these governance factors. Therefore, the relationship between governance and strategic communication is becoming ever closer and for this reason, it is necessary to work in continuous collaboration between the two.
In your opinion, what characteristics should a strategic communication consultancy service fulfil in order to be fully aligned with good corporate governance?
It must be able to provide anticipation, be fully connected to the company's strategic objectives and transmit the organisation's alignment with the different interests mentioned above. In addition, it must provide crisis planning because, although they all have unpredictable elements, they can be better managed with plans and this is often where a company's reputation is really at stake. It is also necessary for these communication plans to be continuously updated and for this, there must be constant discussions with company executives and, at times, with the board of directors. Of course, in executing the actions in the plan, they must carefully select internal and external messages according to audiences and sectors by careful analysis. In short, the communication plan should be able to be aligned with the company's priorities, but also to respond to all the interests and projections that society expects from it.